EU Struggles to Agree on Economic Aid 04/08 06:22
BRUSSELS (AP) -- European governments remained at loggerheads Wednesday over
measures to help the economy weather the coronavirus outbreak, breaking off a
meeting of finance officials who clashed over aid conditions and a proposal to
borrow together to pay for the health crisis.
Finance ministers from the 19 countries that use the euro haggled into the
night for 16 hours by videoconference starting Tuesday. The meeting ended
without a deal is to resume Thursday.
European governments are scrambling to put together hundreds of billions of
euros to save lives as well as companies and families from going bankrupt. Many
countries hit hardest by the virus are also those that can least afford the
costs, like Italy and Spain.
But they are divided over how best to tackle the challenge. Italy and Spain,
backed by France, want to throw all the EU's economic might into fighting the
virus and damage from the disruption it has caused as soon as possible. The
deadlock recalls the divisions from the eurozone debt crisis of 2010-2015.
On the table is a three-part package amounting to around a half-trillion
euros ($550 billion). It consists of up to 240 billion euros in emergency loans
from the eurozone's standing bailout fund, credit guarantees from the European
Investment Bank to keep companies afloat, and support for short-work schemes
that help companies avoid layoffs during what is hoped are temporary business
Italy has rejected using the bailout fund, the European Stability Mechanism.
One reason is that the money is supposed to come with conditions to carry out
economic reforms, based on the fund's original purpose as a bailout refuge for
troubled countries. Italy argues that makes the ESM the wrong tool since the
virus is no country's fault. Prime Minister Giuseppe Conte has dismissed the
bailout fund as "totally inadequate." Germany has proposed waiving most
conditions on the money, but the Netherlands has pushed for requiring reform
The issue of conditions raises the spectre of the harsh austerity imposed on
Greece after its three bailouts during the debt crisis, with deep cuts in
spending and salaries, official visits by an enforcement committee and the
perception of a loss of national sovereignty.
German Finance Minister Olaf Scholz said he and his peers were close to a
deal on the bailout loans, company support and short-work schemes. "We are
mostly in agreement but not quite all the way," he said, citing the need for
unanimity over conditions for the ESM loans and that he expected agreement
before the end of the week.
He said the position of Germany and other countries was that loans should
come with minimal conditions and "should not mean that, as happened 10 years
ago, commissars or a troika travel to the countries and develop a program for
Italy, backed by France, Spain and six other countries, had pushed to go
even farther than using the ESM and rely on a shared bond issue backed by all
countries to raise money at low interest rates and favorable conditions such as
long repayment. Germany and the Netherlands have resisted common borrowing.
Scholz said there had been discussions about a longer-term recovery program
that could be discussed separately from the three aid programs under discussion
but did not provide details.
French Finance Minister Bruno Le Maire tweeted that he and Scholz "call on
all European states to rise to the exceptional challenges to reach an ambitious